The thought would be like this: You give impacting projects to your best talent. Higher the impact, higher the % after the completion. So your less efficient talent would have a salary that follows inflation while people thriving could get very nice salary increase.
If you want to step up, you request bigger responsibilities. Management test you out by giving you 1. You get better % on it. If you fail, you go back to step-1. If not, you just open the door for bigger salary increase and more interesting projects.